Dhaka, Ctg bourses get power to set market control parameters

The Bangladesh Securities and Exchange Commission (BSEC) has decided to authorise the country's two stock exchanges to independently determine and implement market control parameters, including circuit-breaker limits, in accordance with their respective regulations, policies and operational requirements.

The decision empowers Dhaka Stock Exchange (DSE) PLC and Chittagong Stock Exchange (CSE) PLC to set and enforce market control measures under their own regulatory frameworks rather than following a centrally prescribed mechanism.

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According to the commission, the decision recognises that both stock exchanges have the legal authority under their respective regulations to determine and implement market control parameters, including circuit-breaker limits.

The exchanges will now be responsible for independently setting these measures based on applicable regulations, policy considerations, and operational requirements.

The move is expected to provide the exchanges with greater operational flexibility in managing market volatility and maintaining orderly trading through mechanisms such as circuit breakers.

The decision was taken at a BSEC commission meeting today, according to a press release.

To curb abnormal price fluctuations in the shares of fundamentally weak and loss-making listed companies, the DSE recently proposed halving the existing daily circuit breaker, or daily price movement limit, for such companies.

The DSE recently submitted a formal proposal to the BSEC in this regard. Following the proposal, the BSEC decided that, since the stock exchanges have the regulatory authority to determine such market control measures, they should make and implement the decision themselves.

At the same commission meeting, the BSEC also approved another policy decision concerning open-end mutual funds.

Under the decision, a trustee may, in the interest of investors and the capital market, approve the reinvestment of an open-end mutual fund's earnings instead of distributing them as dividends, provided the asset manager submits such a proposal.

The rationale behind the decision is that investors in open-end mutual funds are entitled to redeem their units at any time at the prevailing net asset value.

As a result, even if a fund does not distribute dividends, investors can redeem their units whenever they wish without suffering any financial disadvantage.

The BSEC therefore believes that allowing the reinvestment of earnings could help enhance fund value while protecting investors' interests.